cancel
Showing results for 
Search instead for 
Did you mean: 

Extended withholdingtax in Nigeria

Former Member
0 Kudos

I need some assistance with SAP withholding tax config. Our company will start trading in Nigeria soon where withholding tax is applicable on all local services. Problem is that we cannot claim input vat on these local services and the vat is therefore expensed to the P&L. However, the withholding tax base needs to be Vat exclusive. How do I config the "revised" withholding tax base amount?

Your assistance is much appreciated. Please advise if you require additional info.

Accepted Solutions (1)

Accepted Solutions (1)

former_member220489
Active Contributor
0 Kudos

Hi,

Just put 95.25% in the Percentage subject to Tax in EWT code defenition, this will resolve your issue totally and would get the accounting entry as desired.

Note: Please make sure that, you have not selected the indicator Calculate taxes on net amount in FB00.

NO VAT config is required too.

REgards,

Srinu

Former Member
0 Kudos

Thanks Srinu - your advice makes sense and I will apply & test this. I will create additional tax codes to allow for vendors not registered for vat where wht must be calculated on 100% of invoice value

Answers (3)

Answers (3)

Former Member
0 Kudos
Former Member
0 Kudos

Thanks Raviteja. I also found this thread and config notes. It has assisted me with most of the WHT config but I still need to resolve the issue to calculate WHT on the Vat exclusive amount. Selecting NET Amount in tax type is not yet working.

Problem is that we post the vat amount to the expense account (no vat code) as we annot claim the vat. However the WHT need to exclude the Vat

Former Member
0 Kudos

Hi,

Go to your transaction Ex:F-43 enter, click on Editing Options (F9) Tick the check box Calculate Taxes on net amount and save

Thanks,

Raviteja

Former Member
0 Kudos

Hi

Sap wont work based on your assumptions

I think you didnt tested properly as per the forum guidelines

How the system will know that Consulting fee should be 100 or 105 if you are not using a tax code

If you want post an entry in sap like below

Consulting Fees R105

EWT @ 10% (on Vat exclusive base) R 10

Pay Vendor R95

You have to create WHT with Net amount selected and NVV vat code

Reg

Vishnu

Former Member
0 Kudos

Hi Vishnu

As per reply to Mauri, I'm still in the process of looking for config to create NVV vat code as you kindly suggested.

Will then re-test and confirm if problem is resolved. Working with tax codes are new to me so I'm not familair with config setup.

Thanks

former_member207607
Active Contributor
0 Kudos

Dear Sonja,

into the WT type definition You can ask for excluding the vat from the WT base amount calculation.

You can define the WT BASE amount as Gross, net and so on.

If this information does not help You,

please kindly give me an example of what You need the System to calculate.

Do You need the WT calculation at the invoice time or at the payment time?

The example You reported before it is not so clear to me. What does it mean pay to vendor?

Thanks.

Mauri

Former Member
0 Kudos

Hi Mauri

I'm in the process of reviewing NVV Vat code setup as suggested by Vishnu so not sure yet if problem will be resolved.

The business would prefer WT at invoice posting

Example:

Vendor invoice received shows consultings fees of R1000 and 5 % vat of R50 = Invoice total of R1050. Nigeria tax laws does not allow us to claim the input vat so it is expensed

Current SAP Postings

DR Consultings fees R1050(no vat code postings)

CR Withholding tax R105

CR Vendor R 945

SAP posting required

DR Consultings fees R1050

CR Withholding tax R100 (10% of Vat exlusive amount)

CR Vendor R 950

former_member220489
Active Contributor
0 Kudos

Hi,

Please confgure a new EWT type, where in defenition screen, you need to choose Net Amount under Calculation->Base Amount

IMG->FA->FAGS->WT->EWT->Calculation->WHT type->Define WHT type for Invoice posting

IMG->FA->FAGS->WT->EWT->Calculation->WHT type->Define WHT type for payment posting

Regards,

Srinu

Former Member
0 Kudos

Thanks for your comment Srinu but the prblem is that because we cannot claim the input vat, there is no vat posting and the full amount is posted to expense account. However, Vat still needs to be excluded from EWT base amount

Example

Vendor Invoice shows:

Consulting fees R100

Vat 5% R5

Total = R105

SAP Posting required:

Consulting Fees R105

EWT @ 10% (on Vat exclusive base) R 10

Pay Vendor R95

Please assist in how config shoul be done.

Thanks

Sonja

Former Member
0 Kudos

Hi

Follow the instructions given by Srinu then create a vat code with NVV account key

NVV always adds the amount to expense line item, in your case consulting fee and it will calculate on 100 only not on 105

Reg

Vishnu

Edited by: vishnu g on Feb 1, 2012 5:42 PM